> While your post has a lot of merit (even if it does simplify things
> quite a bit), I just had to point out a mistake here that is often
> made. With your hypothetical candybar retailing at $1.00 with a 10%
> profit margin, your profit per candy bar is 10 cents. For *profits* to
> increase by 50%, the profit per candy bar must be 15 cents. Assuming
> costs remained the same, that means the actual price of the candy bar
> only increased by 5 cents to $1.05. If the price were raised to $1.50
> without any corresponding rise in cost, the profit per bar would be 60
> cents, and 500% increase!
>You assume that everyone else is taking a fixed cost out of the pie and
the leftover goes to the gas company. The original post said they get
10%. That means if gas is $1.50 they get $.15 (You know.. like tithing)
I don't personally know exactly where all the cost of the gas goes, but
I would imagine that it is more like a pie. e.g. each entity gets a
slice proportioned by the percentage they are entitled to of the
profit. It's probably more complicated than that but I don't think the
oil companies just get the leftover after everyone else takes a fixed
amount out. If that were the case, what happens when the prices is lowered?